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Eng Hamed bin Salim Al Maghderi said presently the company has around 29,875 customers, which will go up to 45,000 within the next five years. Photo - Talib Al Wohaibi/Time of Oman

Muscat: Rural Areas Electricity Company (Raeco) is planning to raise power generation capacity by 336 megawatt in the next five years with an additional investment of OMR391 million.

Of this, 25 per cent or around 90 megawatt power will be from renewable energy projects, especially solar energy, the company's chief executive officer Eng Hamed bin Salim Al Maghderi, told journalists on the sidelines of Oman Power and Water Efficiency and Conservation conference here yesterday.

The additional power is for meeting the power demand of 15,000 households and other customers.

Presently, the company has around 29,875 customers, which will go up to 45,000 within the next five years.

Raeco, he said, has an installed capacity of 436 megawatt and the company is expanding generation capacity by 22 per cent every year. The growth in demand for power varies from 10 per cent to 23 per cent in different regions.

"The government, through the regulatory authority, has decided to install at least 25 per cent of this capacity as renewable energy projects," said Eng Al Maghderi, adding that the diesel plants are very costly due to high cost of fossil fuel and the government has to pump in subsidy.

The 90 megawatt renewable energy projects, which will cost $200 million, are for a five year period ending 2019.

He said although the capital expenditure of renewable energy projects is high, it will reduce dependence on diesel fuel in the long-run.

"The government saves almost $1 for every litre of diesel, if not consumed. We purchase fuel from the government at a heavy subsidy (the price is only one-third of its international price)," Eng Al Maghderi said, adding; "We are in the best location and every day we receive sun light for producing 7,950 gigawatt worth of power."

He said that if the company generates 25 per cent of incremental capacity from renewable sources, it will save up to 90 million litres of diesel or $90 million a year. "This also helps to reduce subsidy and protect the environment."

Elaborating on the ongoing initiatives, Eng Al Maghderi said Raeco has already set up a pilot solar project in Al Mazyouna and another one is planned in Thumrait. "We are also setting up another wind project in Masirah," he said.

Yet another solar project is planned in Ibri (close to Saudi border) for a 3 megawatt solar power project, which is 25 per cent of a 12 megawatt power unit.

Eng Al Maghderi also said that the government is encouraging private sector to invest in renewable energy projects on either power purchase agreement basis or as an independent power project. "We will purchase power from them."